by Adrian-Liviu Dorofte

Milestone for Daimler in China: Integrated sales company for cars

Daimler has reached a crucial milestone in growth market China: The establishment of Beijing Mercedes-Benz Sales Service Co., Ltd. means that all sales activities for imported and locally produced Mercedes-Benz cars will now be combined under one roof. The new company is a 50:50 joint venture with Daimler’s strategic partner, Beijing Automotive Group (BAIC).

“China is a key element of our Mercedes-Benz 2020 growth strategy,” stated Dr. Dieter Zetsche, Chairman of the Board of Management of Daimler AG and Head of Mercedes-Benz Cars. “In order to consistently implement our growth strategy in this important market, we have also added a Board of Management position for China under the leadership of Hubertus Troska. With the establishment of the new sales company, we are now increasing the effectiveness of our sales organization and setting a course for long-term and sustainable growth.”

The new sales company, Beijing Mercedes-Benz Sales Service Co., Ltd., combines the functions of sales & marketing, aftersales, expansion of dealer network, used-car and fleet-car sales, as well as dealer and workshop training for Mercedes-Benz cars in China, in a single integrated organization. Previously, there were two sales channels – one for imported and one for locally-produced cars. As an important step towards the integrated organization, Daimler had in the middle of this year already increased its share of the import company Mercedes-Benz (China) Ltd from 51 to 75 percent.

Nicholas Speeks, President and CEO of Mercedes-Benz (China) Ltd, will become the CEO of the new sales company.

“China Sales Initiative 2015” – continuous expansion of product portfolio and sales centers
Daimler plans to sell 300,000 cars in China in 2015, about two thirds of which will be from local production. Daimler has already initiated key activities this year for long-term and sustainable growth in China within the framework of the “China Sales Initiative 2015” program:

- Equity interest in Mercedes-Benz (China) Ltd. increased from 51 to 75 percent.

- Market launch of new models, including the B-Class and M-Class, which are popular in China, as well as full availability of the locally produced GLK

- Expansion of dealer network to more than 220 dealerships in approximately 100 cities

- Development of “Sales Region West” with its headquarters in Chengdu, Sichuan, in order to better serve the complex Chinese market. Regional development is now complete along with the existing offices in Beijing, Shanghai and Guangzhou

- Addition of leasing to existing financial services in August 2012

In the medium term, the product portfolio of Mercedes-Benz will be continuously expanded: Approximately 20 new and refreshed models will be launched in China alone by 2015.

The dealer network is to grow by about 50 new dealerships each year – in particular outside the major megacities.

In addition, progress is being made with the expansion of local production: In a new engine plant, 4-cylinder gasoline engines will be produced as of 2013 for use in locally-produced Mercedes-Benz cars and vans. Existing capacities for the C-Class, the GLK, and the long-wheelbase E-Class will be increased in line with market demand from currently just over 100,000 vehicles, with 2014 seeing the addition of the new-generation Mercedes-Benz compact cars. In this context, the steady expansion of the Chinese supplier base will leverage cost-cutting potential.

Chinese customers are also playing an increasingly important role for Daimler and Mercedes-Benz with regard to research and development: Chinese groups are already participating in car clinics which allow customer feedback to flow into the product-creation process. In 2011, Mercedes-Benz was the first western premium manufacturer to set up its own design studio in Beijing in order to be even closer to the mobility trends of the future. Furthermore, Daimler’s local R&D activities and joint ventures will help China-specific product and market requirements to receive even more consideration in the product-development process.

Daimler’s new Board of Management position for China

China is highly important to Daimler not only for car sales, but also at the corporate level: China is now the world’s biggest market for motor vehicles. No other western automotive manufacturer is as well established in China as Daimler. On December 12, the Supervisory Board of Daimler AG appointed Hubertus Troska as a member of the Board of Management for the newly created “China” position. Troska is responsible for all of Daimler’s strategic and operating activities in China. With the new “China” Board of Management position, the company will ensure that all aspects of the dynamic market will be dealt with directly in the Board of Management in the future.

Overview: Daimler in China

Daimler Northeast Asia is based in Beijing and includes Mercedes-Benz (China) Ltd, Mercedes-Benz Auto Finance Ltd, Daimler Northeast Asia Parts Trading & Services Co., Ltd., the joint ventures Beijing Benz Automotive Co., Ltd. (BBAC), Beijing Foton Daimler Automotive Co., Ltd. (BFDA), Fujian Benz Automotive Corporation (FBAC) and Shenzhen BYD Daimler New Technology Co. Ltd., as well as sales companies in Hong Kong, South Korea and Taiwan.

Local production of Mercedes-Benz cars began with the predecessor series of the E-Class in the BBAC 50/50 joint venture in 2006; the second C-Class series followed in 2008. BBAC has been producing the current E-Class in a long-wheelbase version tailored specifically for the demands of the Chinese market since May 2010; the first locally produced GLK rolled off the production line in Beijing in December 2011.

On the sales side, Mercedes-Benz Cars is represented in China with its complete product portfolio; almost 200,000 vehicles were sold in the year 2011. Approximately 50 new dealers will be added to the sales network this year, making the brand increasingly present outside the Tier 1 cities.

China is already the fifth-largest sales market for Mercedes-Benz trucks. With a market share of more than 50% in the premium segment, Mercedes-Benz Trucks lead the market above all in the heavy-duty segment. In addition, Daimler is developing the volume segment of the world’s biggest market for commercial vehicles in a joint venture with Foton Motor, a Chinese truck manufacturer. Since mid-2012, the jointly produced medium and heavy trucks of the Auman brand have also been rolling off the production line in Beijing-Huairou.

In addition, Daimler has been producing Mercedes-Benz vans for the Chinese market in the Fujian Benz Automotive Corporation joint venture since April 2010.

Daimler Financial Services

has been providing automotive financing in China through Mercedes-Benz Auto Finance China since 2009. And together with BYD, Daimler has initiated the joint venture Shenzhen BYD Daimler New Technology Co. Ltd to develop an electric vehicle for the Chinese market. This joint venture was officially approved in March 2011.

Credits: Daimler AG

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